Paytm Mall eyes Rs 17,000 crore in gross merchandise value by end of FY20

Online marketplace major Paytm Mall, which is trying to come back as one of the biggest competitors to Amazon India and Flipkart, has said the company is targeting Rs 17,000 crore in gross merchandise value (GMV) by the end of 2019-2020 financial year (FY20).
 
The online marketplace company of Vijay Shekhar Sharma-led One97 Communications said it had already broken even per order basis and would be profitable at an entity level in the next two years.
 
“Paytm Mall is focusing on profitability, reduced costs of logistics, and our distribution that has allowed us to make the business which is contribution positive. That means every order that we deliver is profitable. On order basis, it has broken even. We do not lose money on every order we ship. At an entity level, we are targeting Ebitda break-even by FY22. We will continue to invest one more year on growth milestones and year after that, we will focus on becoming break-even. This has allowed us to double down on growth and become profitable in the next two years,” said Srinivas Mothey, senior vice-president of Paytm Mall.
 
Paytm Mall closed the last financial year with a GMV of Rs 13,000 crore. It is now targeting Rs 17,000 crore GMV in a contribution positive manner it has cut down costs by almost a third. The cash burn at peak last year was close to Rs 200 crore per month, which has now gone down to less than Rs 40 crore a month.
 
“Moving away from a pure warehouse-led model to local shopkeeper model has helped us reduce costs and allowed sellers to invest in logistics and delivery costs to customers. Paytm Mall is investing in technology and creating customer demand in those cities using our traffic,” said Mothey.
 
The company is bullish about its online-to-offline model of working with bricks and mortar retailers for completing orders placed on the platform. The company claims that the reports, which indicate Paytm Mall is not doing well, are not capturing all of the data. “We expect 80 per cent of the orders being shipped from the same city. When you look at our numbers referenced by many research reports, which depend on courier partner data, shipping orders from the store or same city where the shopkeeper uses their own local logistics is not captured,” Mothey said. The company said it has more than 1,00,000 sellers and were planning to scale up to 3,00,000 by the end of this year.
 
Like Amazon India and Flipkart, Paytm Mall is trying to perfect its grocery play as it knows that the next set of customers would be coming from the expansion of this category. The company is expanding operations with both online groceries as well as hyperlocal stores.
 
“We partner merchants such as Big Basket, Isayorganic, Needs Supermart, and Bigbazaar. Here, we aggregate demand from cities to them where they don’t have the reach and they deliver with their logistics to customers in those locations by themselves,” Mothey said.
 
Our approach is that grocery items are already shipped to customers in their pincode and we do not want to recreate but rather use a hyperlocal model by partnering the local city partners,” Mothey said.

The outlook

• Vijay Shekhar Sharma-led company has broken even per order basis, targets Ebitda break-even by FY22

• Claims its cash burn is down from Rs 200 crore to Rs 45 crore a month

• Bullish about online-to-offline model of working with bricks and mortar retailers for completing orders

• Expects 80% of orders being shipped from the same city

• Has 100,000 sellers and plans to increase the number to 300,000 by year-end